Impact investing is just making choices that align your investment dollars with the values you believe in. So why do some people pass it by? Sallie breaks it down.
A question I often get is, “Sallie, why would I want to invest for impact?” Why wouldn’t you want to invest for impact? Why wouldn’t you want to invest in companies that are doing right by the environment, that have a strong stance on social issues like human rights, that have strong corporate governance? The answer often comes back, “But you have to give up return for that, don’t you? And how much return am I going to give up?” That, in my opinion, is dated thinking.
Let me take one example. One of our favorites at Ellevest, gender lens investing — investing with an eye towards the composition of the board, the leadership team, the company. When the research tells us the diverse leadership teams lead to higher returns — not by a little, by a lot. Returns on equity, lower risk, greater innovation, greater employee engagement, greater customer engagement, that diverse teams outperform “smarter” teams.
But then somehow, you have to give up return on the stocks, in order to invest in them? Outdated thinking.
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